The labor market in Romania, between the aging of the active population, lack of investment in competitive workforce development and exodus

• By 2030, the local labor market will need more than 600.000 people to fill highly skilled jobs. In Romania, only 1% of the population aged 25-64 participates in vocational training courses.
• In the next 10 years, Romania will have a triple number of active people aged over 65.
• A 10% increase in the share of the active population over the age of 60 reduces GDP growth per capita by 5.5%.
• Romania, on the 17th place globally in the phenomenon of population migration.

Romania faces multiple demographic challenges, which will have a major impact on the labor market in the next 10 years: the country’s population is aging, there are fewer and fewer active young people on the labor market and the demand for highly qualified labor continues to grow, in the conditions of a developing economy, a BUCHAREST CENTER FOR ECONOMY & SOCIETY  analysis shows. By 2030, Romania will need more than 600,000 people to occupy highly qualified jobs and, at the same time, in the next decade, the aging phenomenon will intensify: the country will have a triple number of active people aged over 65 years.

According to the data of the National Institute for Scientific Research in the Field of Work and Social Protection (INCSMPS) analyzed by CES Bucharest, by 2030, occupations that require highly qualified labor such as IT, legal or health specialists will register increases in demand by 624 thousand people[i] (on average, 100.000 people/year), given that the profile faculties in the country, both state and private (Polytechnic Faculties, Faculties of Administration, Business and Law or Faculties of Medicine), provide cumulatively, annually, a total number of only 40 thousand graduates, according to an estimate made by CES Bucharest based on the data of the National Institute of Statistics[ii].

At the same time, also by 2030, the demand for people with medium and low level of qualification will register a sharp decrease, by more than 400.000 people, according to INCSMPS. In order to remain competitive on the labor market, they should re-specialize, either at work or through vocational retraining courses, to acquire new skills adapted to current market requirements, such as digitalization and automation skills, sustainability or human resource management, according to a World Economic Forum report[iii].

The number of young people active on the labor market in Romania, in decline 

The phenomenon of population aging has intensified in recent years, between 2012 and 2022, with the average age of the resident population in Romania increasing from 40.8 to 42.3 years, according to data from the National Institute of Statistics. According to the estimates of the European Center for the Development of Vocational Training (CEDEFOP), in the next decade, Romania could have a triple number of active people aged over 65[iv] on the labor market.

A 10% increase in the share of the active population over the age of 60 reduces GDP growth per capita by 5.5%, the report of the National Institute for Scientific Research in the Field of Labor and Social Protection shows.

At the same time, the number of young people active on the labor market, aged between 20 and 34, could decrease by 3.5% in 2035 compared to the level of 2020, according to CEDEFOP.

21% of Romanian companies invest in employees skills development

 According to World Bank data, in Romania only 1% of the population aged between 25 and 64 participates in professional training courses, compared to the European average of 9.1%.

In the private sector, 21% of the Romanian companies invest in training the employees skills adapted to the current demand of the labor market, the same data show[v].

Comparatively, in Luxembourg companies can request subsidies from the state, to cover a percentage between 15-20% of the annual employee training expenses. Training support is limited to 7 skills, including digital, foreign languages, management or business training, according to an OECD analysis[vi].

Romania, in the top 20 countries globally in terms of population migration

Another major challenge for the labor market in Romania is the phenomenon of migration. The country ranks 17th globally, with over 5.7 million Romanians who have chosen to work and settle abroad. The ratio between the number of Romanian emigrants and the number of foreign immigrants who settled in Romania is 6 to 1, according to the World Organization for Migration[vii].

At the same time, Romania has been importing more and more workforce in recent years, especially from Asia. In the year 2023, almost 30 thousand people from Asia were working in Bucharest and Ilfov county, most of them from Turkey, Nepal, Sri Lanka, China, India or Bangladesh, according to the official data of the General Inspectorate for Immigration[viii]. According to the public data analyzed by CES Bucharest, most are active in fields such as construction, HoReCa, transport or retail.

The official data of the Ministry of Foreign Affairs[ix] show that most of the 5.7 million Romanians who went abroad are settled in countries such as Italy, Spain, Great Britain or Germany and work mainly in fields such as agriculture, sales, construction, the medical system or IT[x].Among the main reasons Romanians` exodus are the higher level of remuneration in other countries, performing health systems, developed educational infrastructure, mentality or more favorable climatic conditions.

Education contributes to greater productivity, to the growth of the national economy, but also to the identification and promotion of innovation, which brings with it the development of new better-paid jobs, according to another OECD report (Organization for Economic Cooperation and Development)[xi], one of the most important intergovernmental forums, to which Romania officially applies from 2022, but the accession process may even last 4-5 years, according to information appearing in the public space. In Belgium, the contribution of education to the economy is 14%, according to a study by the International Journal of Science and Research[xii]. The education and continuous specialization of the active population, aligned with economic and technological developments are the foundation of a sustainable and performing economy.

Romania also has one of the lowest funding of the education system in Europe, at 3.2% of GDP compared to a European average of 4.8%[xiii], and this is reflected in the lower number of students and master’s students who perform higher education in the country’s universities. From 2020 to 2022, Romanian faculties registered a decrease of almost 22,000 graduates, according to the National Institute of Statistics figures.

[i]National Institute for Scientific Research in the Field of Labor and Social Protection

[ii]National Institute of Statistics

[iii]World Economic Forum

[iv]European Centre for the Development of Vocational Training

[v]World Bank

[vi]OECD: Good practices in Europe for supporting employers to promote skills development

[vii]International Organization for Migration

[viii]General Inspectorate for Immigrationi

[ix]Ministry of Foreign Affairs

[x]OECD: Labour market of Romanian emigrants

[xi]OECD: Education GPS

[xii]International Journal of Science and Research

[xiii]Eurostat